Capitalism Didn’t Get Worse - It Stopped Pretending
The Cold War didn’t make capitalism kinder. It forced it to behave. And once that pressure disappeared, so did the illusion.
What Changed Wasn’t Morality
For a period in the 20th century, capitalism looked almost civilized. In the United States and parts of Western Europe, top marginal tax rates stayed extremely high, unions had real bargaining power, and welfare systems expanded. Public housing, education, and social insurance became part of the mainstream political settlement. To many people looking back, that period seems like proof that capitalism can be managed into something more humane.
That is the wrong conclusion. Capitalism did not become worse over time. It simply stopped pretending. What many people remember as a more balanced era was not the result of a kinder ruling class. It was the result of pressure.
The Core Mechanism: Pressure, Not Kindness
The system behaved differently because it was constrained from multiple directions. Internally, unions were stronger, labor militancy was more credible, and political parties had to take working-class pressure seriously. In many advanced economies, union density was above 30 percent, which meant workers had leverage that is far weaker today. Externally, there was something even more important: a rival system.
The Soviet Union was not a perfect model, and pretending otherwise would be stupid. It had repression, inefficiency, and serious internal contradictions. But none of that changes the key point. Its existence made one thing impossible to deny: capitalism was not the only conceivable way to organize society. Once people can imagine an alternative, they stop treating the existing order as natural. They start comparing. They start asking questions. Why is housing possible there but not here? Why is education accessible there but not here? Why is stability achievable there but not here? That is where real pressure comes from.
Cold War Capitalism: Concessions Under Constraint
What people now call the “golden age” of capitalism was built on that pressure. High tax rates on top incomes were not simply a moral commitment to fairness. In the United States, the top marginal rate stayed around 70 percent from the mid-1960s to 1980, and it was even higher before that. This did not mean the rich paid 70 percent on every dollar, but it did signal that there were limits on how much wealth could be openly concentrated at the top.
The same pattern applied elsewhere. Labor protections were not just noble ideals floating above politics. They were negotiated outcomes backed by organized power. Welfare systems were not acts of charity. They were part of a strategy to maintain social stability and keep working populations invested in the system. The logic was brutally simple: give people enough to stay inside the structure, or risk them rejecting it. That was not kindness. That was survival.
The Structural Shift: Before and After 1991
To be precise, this shift did not begin all at once in 1991. Union decline in the United States and the United Kingdom had already begun in the late 1970s and accelerated in the 1980s. Financialization, deregulation, and globalization were already reshaping the economy before the Soviet Union collapsed. So this is not a cartoon story where one event explains everything.
Still, the collapse of the Soviet Union marked a major turning point. It removed one of the largest external pressures that had forced Western elites to keep proving that capitalism could deliver a tolerable life for ordinary people. Once that pressure disappeared, one major reason for restraint disappeared with it. After that, the trend became clearer and harder to hide. Across OECD countries, union density fell from roughly 30 percent in the mid-1980s to around 15 percent in recent years. In many advanced economies, labor’s share of national income declined while returns to capital increased. That was not random. It reflected a shift in power.
After the Cold War: When the Mask Came Off
In the decades that followed, the priorities of the system became more obvious. Welfare became more conditional and restrictive. Public systems were partially privatized. Housing increasingly turned into a financial asset rather than a social good. Education became more expensive, especially in the United States, where student debt has climbed past $1.7 trillion. Healthcare grew more profitable and more punishing at the same time.
Corporate behavior also changed in ways that ordinary people could feel directly. Layoffs became signals of efficiency. Stock prices mattered more than job stability. Short-term financial returns became more important than long-term social investment. We were told this was modernization, efficiency, and market discipline. What it actually meant was that the system no longer felt the same need to maintain compromise. The pressure had weakened, so the mask came off.
The New Variable: Why China Matters Now
This is also why China matters in this conversation. Not because it is a perfect system. It is not. It has its own contradictions, limitations, and unresolved tensions. But its existence changes the environment in a way that is politically important. For the first time since the early 1990s, the United States is once again facing a large-scale system that operates differently and produces visible outcomes in areas like infrastructure, industrial policy, and long-term planning.
That creates comparison, and comparison creates pressure. People begin asking uncomfortable questions. Why can’t things be built faster here? Why does public capacity feel weaker? Why do costs keep rising while outcomes feel worse? This is why China is often framed as an “existential threat.” It is not only about military or economic competition. It is also about narrative control. If people start believing that different systems can produce different results, then the claim that there is no alternative starts to crack. And once that claim weakens, pressure begins to return.
What This Means for People Like Us
This is not abstract theory. This is everyday life. Wages struggle to keep up with productivity. Housing takes up more of income. Debt becomes normal. Healthcare and education become permanent financial burdens. Job security declines, and people are told to treat insecurity as maturity.
Then comes the insult layered on top of the injury. People are told it is their fault. They didn’t work hard enough. They didn’t plan well enough. They didn’t compete hard enough. But the structure changed, and once the structure changes, outcomes follow. People are not imagining that the social contract feels thinner. It is thinner.
My Take: Power Without Counterbalance
This is not mainly a story about left versus right, and reducing it to party labels only makes people dumber. The real issue is power. When there is a counterbalance, whether through strong labor, organized political pressure, or external competition, outcomes tend to be distributed more broadly. When that counterbalance weakens, outcomes concentrate upward.
That is not a moral observation. It is a structural one. Power does not restrain itself because it discovers virtue. It restrains itself when the cost of refusing to compromise becomes too high.
What Comes Next
No system corrects itself automatically. Nothing about this trajectory reverses on its own. Change happens when pressure builds again, whether through organization, policy, new institutional capacity, or broader shifts in the economic order. Without that, the existing direction tends to continue, because there is nothing forcing the people at the top to give anything back.
That is the point people need to understand. Rights, protections, and a tolerable standard of life are not secured by good intentions. They survive when there is enough pressure behind them to make retreat too expensive.
Closing
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The US doesn't like educating the masses. When the US decided to join the Great War, it drafted a large number of men and screened them for intelligence. About 1/3 could not be trusted with a gun. That led to the US creating the public school system.
Once WWII left the US as the only hegemon, the US decided to develop rocket technology. US rockets were blowing up on the launchpads until the Soviet Union launched Sputnik. Previously the USSR had developed atomic bombs, and Sputnik proved those bombs could land anywhere. This was when the US got serious about education. There was “new math”. There was screening children for intelligence by the 4th grade. There was special programs for the gifted. There was also NASA as a center for technology development.
After the Soviet Union collapsed, the US diverted military spending into finance. Welfare was abolished. Corporations were deregulated.
Then 9-11 happened. Oops! How do you compete with nonstate actors?
There was a lot that was good about the USSR. It looked after its people. It had to cope with tens of millions of serfs and peasants moving to the cities.They had to be housed. It had to cope with a murderous Russian upper-class out to take back by force what they had lost, and who were assisted by the west. It had to fight back the huge German invasion of the Russian homeland. At the same time it built a modern industrial state, powerful enough to challenge the West. It is infact the foundation of modern Russia.